How To Choose a Health Insurance Plan
by
Charles Lamson
You must choose one or more plans to provide coverage for you and your dependents. If you are employed, first review the various health insurance plans your company offers. If you can't get coverage from an employer, get plan descriptions and policy costs from several providers, including a group plan from a professional or trade organization. Then take your time and carefully read the plan materials to understand exactly what is covered, and at what cost. Next, add up what you have spent on medical costs over the past few years and what you might expect to spend in the future, so you can see what your costs would be under various plans.
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How do you find health insurance if you have just graduated from college, don't yet have a job, and can no longer be covered by your parents' policy? Or maybe you are between jobs or need time to search out the best policy but do not want to be without protection.
You will have to ask yourself some difficult questions to decide whether you want an indemnity or a managed care plan, and then to choose the particular plan:
How important is cost compared with having freedom of choice? You may have to pay more to stay with your current doctor if he or she is not part of a managed care plan you are considering. Also, you have to decide if you can live with the managed care plan's approach to healthcare.
Will you be reimbursed if you choose a managed care plan and want to see an out of network provider? For most people, the managed care route is cheaper, even if you visit a doctor only once a year, because of indemnity plan "reasonable charge" provisions.
What type of coverage do you need? Everyone has different needs; one person may want a plan with good maternity and pediatric care, whereas another wants outpatient mental health benefits. Make sure the plans you consider offer what you want.
How good is the managed care network? Look at the participating doctors and hospitals to see how many of your providers are part of the plan. Check out the credentials of participating providers; a good sign is accreditation from the National Committee for Quality Assurance (NCQA). Are the providers' locations convenient for you? What preventive medical programs does it provide? Has membership grown? Talk to friends and associates to see what their experiences have been with the plan.
How old are you and how is your health? Many financial advisors recommend buying the lowest-cost plan---which may be an indemnity plan with a high deductible---if you are young and healthy.
Once you have considered all of the coverage and resources that are available to you, consider where gaps in your health insurance coverage potentially lie and how best to fill them. Doing this requires an understanding of the features, policy provisions, and coverage provided by various insurance carriers and policies.
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smart.sites
What grade did your health plan get on its quality “report card” this
year? The National Committee on Quality Assurance (NCQA) can
tell you: www.ncqa.org.
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*SOURCE: PERSONAL FINANCIAL PLANNING, 10TH ED., 2005, LAWRENCE J. GITMAN, MICHAEL D. JOEHNK, PGS. 370-371*
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You must choose one or more plans to provide coverage for you and your dependents. If you are employed, first review the various health insurance plans your company offers. If you can't get coverage from an employer, get plan descriptions and policy costs from several providers, including a group plan from a professional or trade organization. Then take your time and carefully read the plan materials to understand exactly what is covered, and at what cost. Next, add up what you have spent on medical costs over the past few years and what you might expect to spend in the future, so you can see what your costs would be under various plans.
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